chp 7 online customer behavior
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CHAPTER 7
ONLINE CONSUMER BEHAVIORDIPLOMA IN INTERNATIONAL BUSINESS
(BUS2513)
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Learning Objectives
1. Describe the factors that influence consumer behavior online.
2. Understand the decision-making process of consumer purchasing online.
3. Distinguish online consumer from traditional consumer.
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Types Of Markets
1) Consumer
2) Business
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Consumer Market
Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make products.
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The nature of customer complaints
Source: Neill Denny, “Why complaining is our new hobby,” from Marketing Magazine, 26 November 1998, p. 16. Reprinted with permission.
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Buying Behavior
The decision processes and acts of people involved in buying and using products.
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Consumer Buying Behavior
The decision processes and purchasing activities of people who purchase products for personal or household use and not for business purposes.
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Consumer Behavior Model
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Level Of Involvement
An individual’s intensity of interest in a product and the importance of the product for that person.
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Levels Of Involvement
Enduring
Situational
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Consumer Problem Solving
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Slide6-7 Characteristics of Three Types Characteristics of Three Types
of Consumer Decision Makingof Consumer Decision MakingTable6.1
Types ofTypes ofDecisionDecision
Routine
ConsumerConsumerInvolvementInvolvementIn PurchaseIn Purchase
Limited
Extensive
One of a few brands, sellers and product characteristics evaluated
Characteristics ofCharacteristics ofConsideration SetConsideration Set
InformationInformationSourcesSourcesConsultedConsulted
ConsumerConsumerInvolvementInvolvementIn PurchaseIn Purchase
Several brands, sellers and product characteristics evaluated
Many brands, sellers and product characteristics evaluated
Low
Moderate
High
Internalsourcesused
Internaland someexternalsources
Internaland manyexternalsources
As littleas possible
Some timeinvested
Much timeinvested
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Routinized Response Behavior
The consumer problem-solving process used when purchasing frequently purchased, low-cost items needing very little search-and-decision effort.
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Limited Problem Solving
The consumer problem-solving process employed when buying occasionally or when they need to obtain information about an unfamiliar brand in a familiar product category.
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Extended Problem Solving
A consumer problem-solving process employed when purchasing unfamiliar, expensive, or infrequently bought products.
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Impulse Buying
An unplanned buying behavior resulting from a powerful urge to buy something immediately.
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Consumer BuyingDecision Process
A five-stage purchase decision process that includes problem recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation.
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A Model of Consumer Buying ProcessA Model of Consumer Buying ProcessFigure6.1
Slide6-1
PostpurchaseEvaluation
NeedRecognition
InformationSearch
AlternativeEvaluation
PurchaseDecision
Consumer Buying Process
SituationalInfluences
SocialInfluences
MarketingInfluences
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Slide6-8
Influences on Consumer Behavior:Influences on Consumer Behavior:Figure6.5
Social Influences
• Culture• Subculture• Social Class• Reference Groups• Family
Marketing Influences
• Product• Price• Placement• Promotion
Situational Influences
• Physical Surroundings• Social Surrounding• Time• Task• Momentary Conditions
Consumer Buying Process
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Consumer Buying Decision Process/Possible Influences on the Process
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Problem Recognition
Difference between desired state and actual condition.
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Aspects Of Information Search
Internal Search
External Search
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Slide6-3
Information SearchInformation Search
InternalInternal
InformationInformationSourcesSources
GroupGroup
MarketingMarketingPublicPublic
ExperientialExperiential
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Internal Search
An information search in which buyers search their memories for information about their products that might solve their problem.
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External Search
An information search in which buyers seek information from sources other than memory.
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Evaluation Of Alternatives
Consideration Set
Evaluative Criteria
Framing Alternatives
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Slide6-4
Alternative EvaluationAlternative Evaluation
Attitudes
AlternativeEvaluation
Subjective Criteria Objective Criteria
“Four Wheel Drive”“Ability to Tow 10,000 lbs”“Compact Disc Player”“Seats Seven”
“Sporty Image”“Popular”“Great Stereo”“Rugged Image”
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Cognitive Dissonance
A buyer’s doubts shortly after a purchase about whether the decision was the right one.
Sample ads of cognitive dissonance
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Situational Influences
Influences resulting from circumstances, time, and location that affect the consumer buying decision process.
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Categories OfSituational Factors
Physical Surroundings
Social Surroundings
Time Perspective
Reason For Purchase
Buyer’s Mood/Condition
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Psychological Influences
Factors that in part determine people’s general behavior, thus influencing their behavior as consumers.
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Types Of Perception
Information Inputs
Selective Exposure
Selective Distortion
Selective Retention
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Motives
An internal energizing force that directs a person’s behavior toward satisfying needs or achieving goals.
Motive for buying organic foods
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Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs
Vacations, College Courses
Charitable Organizations
Auxiliary Needs:Friendship and Belonging
Esteem Needs: Status, Respect, Self-esteem Prestige Brands
Club Memberships
Greeting Cards
Locks, Insurance
Flour, Green Beans,
Water Supply
Safety Needs:Physical and Financial Security
Physiological Needs:Food, Water, Rest, Sex, Air
Self-Actualization Needs: Self-Fulfillment
Needs Products
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Sources Of Learning
Behavior Consequences
Information Processing
Experience
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Attitude
An individual’s enduring evaluation of feelings about and behavioral tendencies toward an object or idea.
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Components Of Attitude
Cognitive- knowledge or information
Affective- feelings or emotions
Behavioral- actions regarding object or idea
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Personality And Self-Concept
Personality – internal traits and behavioral tendencies
Self-Concept – perception or view of oneself
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Lifestyle
An individual’s pattern of living expressed through activities, interests, and opinions.
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Lifestyle Affected By:
Age
Education
Income
Social Class
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Role
Actions and activities that a person in a particular position is supposed to perform based on expectations of the individual and surrounding persons.
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Consumer Socialization
The process through which a person acquires the knowledge and skills to function as a consumer.
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Types Of Family Decisionmaking
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Reference Group
A group that a person identifies with so strongly that he or she adopts the values, attitudes, and behavior of group members.
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Types Of Reference Groups
1. Membership
2. Aspirational
3. Disassociative
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Opinion Leader
A member of an informal group who provides information about a specific topic to other group members.
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Examples OfOpinion Leaders And Topics
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Social Class
An open group of individuals with similar social rank.
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Culture
The accumulation of values, knowledge, beliefs, customs, objects, and concepts of a society.
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Subcultures
A group of individuals whose characteristic values (religion, etc.) and behavior patterns are similar and different from those of the surrounding culture.
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U.S. Ethnic Subcultures
African American
Hispanic
Asian American
How about Malaysian ethnic subcultures?
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Slide6-6
Postpurchase EvaluationPostpurchase EvaluationFigure6.4
DissatisfactionLowValue
NeedRecognition
InformationSearch, etc.
Satisfaction
HighValue
LoyaltyLong TermRelationship
How Value Perceptions Can Influence Postpurchase Behavior
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Types of Online Shoppers
Time-starved consumers: Usually found in a house with two sources of income. They are willing to pay higher prices or costs more to save time shopping, no matter whether they like it or not on-line buying experience.
Shopping avoiders :Do not like shopping and may use the Internet just to avoid the crowd, queue or traffic congestion.
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Types of Online Shoppers
New technologist:Usually young people and comfortable with
technology, online shopping because "it's cool".
Time-sensitive materialist atau click-and-mortar consumers:Only use the Internet to view the products they prefer
to make purchases from traditional stores for taking security or other reasons.
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Types of Online Shoppers
Traditionals : Just like a traditional store. Probably not going to do shopping online.
Hunter-gatherers: 20 percent of the total number of on-line customers. Like to compare prices and find the best prices.
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Types of Online Shoppers
Brand loyalists:Purchase online for a particular brand as it gets more benefits.
Single shoppers:16 percent of the total number of on-line customers. Liked the Internet not only for shopping but also for banking, communication, playing games, news and other activities.
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Online Purchase Decision Aids
Shopping Portals:comprehensive portals
linked to many different vendorscomparison shopping sitesthere is a comparison tool
niche orientedhave specialized in a product(cattoys.com)there is a referral fee quotationthere is a portal that has a formal
relationship with partners
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Online Purchase Decision Aids
Shopbots (Shopping robot) dan Agent (Shopping agent):
A review tools (Scout) Web to customers who specify the search criteria. Different Shopbots using different search methods.
Zdnet.com/computershopper – computerOffice.com – office furniture
Business Rating Sites:Enhance the rating of the various types of e-tailer and
online products based on many criteria.Gomez.comBizrate.com
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Online Purchase Decision Aids
Trust Verification Sites:Works to assess and confirm whether a given e-
tailer is reliable or not. For example, TRUSTe, BBBOnLine, Secure ASSURE and Ernst & Young. TRUSTe Stamp available on e-tailer Web site reflect the credit. E-tailer has to pay to TRUSTe to use such stamps.
Other Shopping Tools:Escrow services- 3rd party to assure qualityCommunities of consumers
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Learning about Consumer Behavior Online
A Model of Consumer Behavior OnlineThe purpose of a consumer behavior model is
to help vendors understand how a consumer makes a purchasing decisionIndependent (or uncontrollable) variables – personal
characteristics and environmental characteristicsIntervening or moderating variables – market stimuli
and EC systems (vendor-controlled)Dependent variables – buyers’ decisions
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– Personal CharacteristicsHigher education and/or income levels are
associated with more online shopping.More experience people have with Internet
shopping, the more likely they are to spend more money online.
Most-cited reasons people do not purchase:Shipping charges (51%)Difficulty in judging the quality of product (44%)Cannot return items easily (32%)Credit card safety (24%)
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– Environmental Characteristics
Social – people are influenced by family members, friends, coworkers, and trends. Of importance are Internet communities, discussion groups.
Cultural/community – where people live influence what they buy. Rural shoppers differ from urban shoppers, Europe shoppers differ from Asian shoppers.
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The ConsumerDecision-Making Process
Roles people play in the decision-making process: Initiator – the person who suggests a product/service Influencer – a person whose advice influence
purchasing decisionDecider – the person who makes the buying decisionBuyer – the person who makes an actual purchaseUser – the person who consumes or uses a
product/service
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The ConsumerDecision-Making Process
Online Consumer decision making models:Generic Purchasing-Decision ModelCustomer Decision Model in Web PurchasingOnline Buyer Decision Support Model
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Generic Purchasing-Decision Model
Consists of five phases:Need identification – consumer convinced the
need of a product/serviceInformation search – on various alternatives to
satisfy the needEvaluation of alternatives – a set of criteria is
developed to help evaluation and comparisonPurchase and delivery – payment, purchase
warrantiesAfter purchase evaluation – customer service
and evaluation of usefulness
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Web Purchasing Model
Each of the phases of the purchasing model can be supported by Consumer Decision Support System facilities and Internet and Web facilities.
CDSS facilities support the specific decisions in the process.
EC technologies provide necessary mechanisms and enhance communication and collaboration.
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Online Buyer Decision Support Model
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Online Buyer Decision Support Model – Part 1
Buyer behaviorIdentify and manage buying criteriaSearch for products and merchantsCompare alternatives
DSS Design Choices (Current Transaction)Product representationOptions to support searchingOptions to compare alternatives
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Online Buyer Decision Support Model – Part 2 & 3
Comparing alternativesPrice negotiationShipping optionsFinance center
Cross-transaction ConcernsPersonalizationUser preferencesCustomer help
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Online versus traditional consumer
Technology adoptionOnline consumer is best predicted by Internet self-
efficacy, followed by perceived financial benefits.
Convenience and Decision SupportOnline consumer only desire is convenience and
timesaving.Depth and breadth of information available on the
Internet meets the consumer’s need of information to make purchase decision.
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Online versus traditional consumer
Market dynamicsMore alternatives can be considered online because of
lower search costs and greater availability of information.
Online consumers becoming less price conscious over time.
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Online versus traditional consumer
Loyalty and trustThe ability to customize products/services and
transactional environment online is far beyond the capability of traditional store.
Consumer loyalty to access competitor’s site is only a click away.
Trust for online consumer is an expectation based on past performance, a strategy to reduce uncertainty, a willingness to rely on an exchanging partner, and a perception of reliability.
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Online versus traditional consumer
Products versus servicesProducts are tangible and services are intangible in
traditional commerce but both products and services are intangible online.
Online shopping consumers concern about risk for products than services, more concern about perceived ease of use for services rather than products.
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Online versus traditional consumer
Site design The impact of the shop window are correlated to the impact of
a site’s home page but the impact of store layout versus site layout has some differences.
Thus, more study is needed to examine what design elements affect online consumer behavior.
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Online versus traditional consumer
Empowerment, persuasion and entertainment The ability to shop worldwide at anytime from virtually any
location with the availability of real-time product and competitor information increase consumer’s sense of freedom and power.
Personalized welcome pages and tailored recommendations list provide customers with a powerful feeling of discovery.
Online consumers can react to persuasive media more often than a human at selling.
Online shopping is also a form of entertainment and/or social interaction.